6/12/07 – Broken trend of relief rally

The bounce took two days. Interestingly on friday the SPY retraced 38% of last weeks down move, then yesterday the SPY moved to a 50% retracement. Before the end of the day it moved back down to the 38% retracement. At the open the 10yr fell out of bed, off 15 ticks. This drove the mkt down at the open. But by 7:50am, much of the down gap had been filled. Pushing on lows at 8:15
Quote of the day: Taken from the Stock Trader’s Almanac. “The worst bankruptcy in the world is the person who has lost his enthusiasm.” – H.W. Arnold
Interesting sidenote – the talking heads have been talking about “Global LIquidity” pushing the markets higher and higher. I remember that from the late 90’s… Tech is here to stay, prosperity forever, etc…
Here is the market driver: 10 yr Weekly Chart

Here are the trades I placed:
I like these as a mispricing. I can wait on these. Currently the Reward/risk is 11:1, with the max loss being .09 per contract.. I don’t intend to hold on to these until Dec. Rather, I will start unloading these as 1 unit lots @ .25 and up.
CREE – 2 units – Dec/Jan 25p for .09
1 Unit Dec/Jan 22.5p for .10
Stalking:
RF calendar
EK. – hit it’s high, now it is bouncing off support @ 26. I am attempting to unwind my remaining positions. I have some expectation that the price will move toward 25.
The market slid hard in the afternoon as the bonds fell to session lows, and their highs yields in 5 years.
I am happy to sit on my hands today and let my positions work. Another 15-25 pts in the SPX would be a thing of beauty.
I backed up those CREE orders with about 50 contracts, then the spread moved out.
AMTD, COGN, and STLD spreads opened up nicely.